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South Korean shipbuilders undergo sharp drop in new orders

South Korean shipbuilders undergo sharp drop in new orders

South Korean shipbuilders have experienced a dramatic drop in new orders in the first five months of the year, falling sharply short of their annual order targets due to the coronavirus outbreak and a decline in oil prices, data from the companies showed.

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Korea Shipbuilding & Offshore Engineering Co. said its three shipbuilding subsidiaries bagged a combined $1.82 worth of orders to build a total of 29 ships in the January-May period, hitting a meager $17.5 billion target of 10.4 percent of their annual order.

During the five-month period, Daewoo Shipbuilding & Marine Engineering Co. reached 20 per cent of its $7.21 billion annual order target with orders worth only $1.43 billion to build six ships.

“If prices of West Texas Intermediate (WTI) crude move up over $40 a barrel, the production of shale gas and oil in the U.S. will rise, which will generate orders of commercial vessels,” said Bae Se-jin, an analyst at Hyundai Motor Securities Co.

By clinching $490 million in orders or five ships, Samsung Heavy Industries Co. achieved a mere 6 per cent of its $8.4 billion annual order target.

Their dismal new orders were mainly due to the coronavirus pandemic which hurt global trade and resulted in a sharp fall in oil prices.

Maritime Business World 

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